Rajasthan, Kerala and Odisha dominate R&D spending by states: MC Analysis

Health R&D got a boost due to pandemic

Kerala, Rajasthan and Odisha do not account for a large proportion of the country’s economy, but they do lead the nation in research and development spending by states, according to a Moneycontrol analysis.

In 2024-25, the three states will likely account for 77 percent of the R&D spending of 10 states across the country, according to latest data released by the Reserve Bank of India.

The RBI analysis published in "State Finances: A Study of State Budgets 2024" considers the R&D spending of 10 states and UTs and found that R&D expenditure at Rs 17,478 crore was a meagre 0.1 percent of GDP of these ten states and UTs.

Rajasthan spends fourfold the national average, while Kerala spent thrice as much in FY24.

Odisha only spends slightly higher than the average, but its share rose from 0.03 percent five years ago to 0.12 percent in FY25.

The three states’ share of R&D spending as a percentage of GDP has jumped over the last five years.

While they accounted for 46 percent of the total spending in FY21, their share went up to 74 percent in FY24.

Odisha’s witnessed a 55.9 percent growth per annum, while Rajasthan has seen a 27.5 percent increase per annum.

Odisha is likely to overtake Karnataka in R&D spending in FY25, as the state expects to spend over 10 percent more than the industrialised southern centre, home to India’s tech capital.

While spending as a share of their GDP has risen for these states, its shrunk for the likes of Tamil Nadu, Karnataka and Haryana.

Haryana’s share of R&D spending is expected to fall from 0.08 percent of its economy in FY21 to 0.03 percent in FY25. Karnataka’s share is expected to decline from 0.11 percent in FY21 to 0.07 percent in FY25.

Changing preferences

Data indicates a shift in preferences as well. RBI report notes a jump in health-related expenditure post-pandemic with agricultural research taking a back seat.

Medical, health, family welfare and sanitation accounted for 77 percent of R&D spends in Haryana compared with 69 percent five years ago.

In the case of Bihar, it was 89 percent of total spending, while it was  46 percent for Karnataka.

The share in Karnataka was 35 percent five years ago.

But medical is not the only priority area.

For Odisha, Punjab and Kerala, education spending trounced all. In Odisha, nearly half of the total R&D spends by the state government went to education, while the ratio for Kerala was 46 percent and that for Punjab was 48.3 percent.

Punjab, Haryana, Karnataka and Kerala were also major spenders when it came to agricultural research, while Kerala and Odisha led the country in industrial research spending.

Infrastructure was a top priority for Rajasthan as it outspent all the other nine states for which data is available.

Data released by the RBI showed that health will likely for nearly half of the country’s total spends in FY25, while that of agri research declined to below 20 percent.

“Over time, the proportions of health and education related R&D spending have increased, while that of agricultural research has declined,” the study pointed out.